Wells Fargo needs big reforms

San Francisco Chronicle

December 14, 2016Updated: December 14, 2016 4:30pm

Photo: CX Matiash, Associated Press

FILE - In this May 6, 2012, file photo, a Wells Fargo sign is displayed at a branch in New York. Wells Fargo has confirmed that the Securities and Exchange Commission has launched an investigation into its sales practices. Wells Fargo came under fire after it became known that the bank’s employees, pushed to the limit by impossible sales goals, opened as many as 2 million bank and credit card accounts without customers’ authorization. (AP Photo/CX Matiash, File)

FILE - In this May 6, 2012, file photo, a Wells Fargo sign is...

Wells Fargo has a new CEO, Timothy Sloan, who had nothing to do with the fake-account scandal that made the San Francisco bank a poster child for bad Wall Street behavior earlier this year. But Wells’ latest news makes it clear that the bank needs more than a simple switch at the top.

On the national level, federal regulators scrutinized the bank’s detailed bankruptcy plan — a practice they do with all of the country’s largest banks since the “too big to fail” era — and found it wanting.

The regulators slapped Wells with restrictions on new business and could increase penalties if Wells doesn’t submit a plan that passes muster by March.

What’s particularly galling for Wells is the fact that it stood alone in flunking the federal tests. The Federal Reserve Board and Federal Deposit Insurance Corp. signed off on the living wills of JPMorgan Chase, Bank of America and other banks that have seen more than their share of trouble.

Wells is flunking out in its hometown, too.

San Francisco’s treasurer, José Cisneros, sent Wells a letter on Tuesday kicking the bank out of a program that helps low-income residents start bank accounts, and demanding answers as to how many San Francisco residents have been affected by the unauthorized accounts. Cisneros said he’s asked for answers to basic questions about the scandal for months and hasn’t gotten any answers.

Wells Fargo communications manager Ruben Pulido told us that Wells is “committed to learn the necessary lessons and take decisive actions so that our customers are not susceptible to the kinds of behaviors that got us here today.”